Realtors applying ‘smaller configuration’ strategy in commercial segment

BANGALORE/MUMBAI/KOLKATA: A small budget for buying offices in premium complexes isn't a problem anymore as developers are applying the ‘smaller configuration’ strategy in the commercial segment, a move that has worked well for them in residential markets.

“Given that residential property markets have been sluggish in many markets, individuals now have the option of investing in commercial properties such as offices or retail units. Some of these are available at quite attractive prices; in some cases, even as low as half the residential property rates,” says Sanjay Dutt, executive MD, South Asia, Cushman & Wakefield.

Lower entry barrier, both in terms of configuration and ticket size, is allowing end users as well as investors to access grade A offices. So, not just small business owners, professionals, including lawyers, architects and chartered accounts are investing in office property.

Commercial property serves as a lucrative investment option for investors, who benefit from rental income as well as capital appreciation. “Grade A commercial properties give 8-10% rental returns on the capital value depending on interest rates,” says Juggy Marwaha, managing director - South, JLL India.

Developers are also building smaller offices, or reconfiguring smaller units, to cater to demand. Mumbai-based Marathon Group, for instance, has developed Marathon Nextgen Icon, a Small Business Spaces (SBS) dedicated tower at its Nextgen Complex, in Mumbai's secondary business district of Lower Parel. The developer has built units as small as 1,000-3,000 sq ft at its projects Marathon Innova and Marathon Icon at Lower Parel, and Marathon Max in Mulund, a Mumbai suburb.

“Interestingly, individual investors are also booking these places, considering the prices of these commercial spaces compared to residential units in the same area,” says Mayur Shah, MD, Marathon Group.

In the south, Bengaluru-based Purvankara Projects is launching Purva Summit, its Grade A office space in Hi-Tech City (Kondapur), in Hyderabad, after success of its commercial projects in Chennai and Bengaluru.